A PPC management fee is what you pay a person or agency to run your pay-per-click advertising, kept separate from the money that goes to Google or Microsoft for the clicks themselves. In the UK it is normally quoted in pounds, and usually before VAT.
How PPC management fees work
There are a handful of common pricing models. Most providers use one, or a mix:
| Model | How it is worked out | Suits | Watch for |
|---|---|---|---|
| Flat monthly fee | A fixed amount each month for an agreed scope | Businesses wanting predictable costs | What happens when the scope grows |
| Percentage of ad spend | A share of what you spend on ads, often with a monthly minimum | Accounts whose spend changes a lot through the year | The fee rises with spend whether or not results do |
| Hybrid | A base fee plus a percentage above a spend level | Growing accounts | Where the threshold sits |
| Performance-based | A fee per lead or a share of revenue | Mature accounts with tracking both sides trust | Disputes over what counts as a lead |
| Day rate or project fee | Time-based or fixed price for set work | Audits, new account builds, training | Ongoing work not covered |
A one-off set-up fee is also common when an account is being built or rebuilt.
The fee should sit apart from your ad spend. The healthiest arrangement is for Google to bill you directly through your own payments profile, so you can see every pound that reached the platform, and for the manager to invoice separately for their time.
Why it matters, including VAT
The fee is part of what each customer costs you. If £1,000 of ad spend brings in 20 enquiries, Google shows a cost per acquisition of £50. Add a £500 monthly fee and the real cost per enquiry is £75. Those figures are only an illustration, but the arithmetic is worth doing with your own numbers before deciding a campaign is profitable.
VAT changes the sum for some businesses. A provider registered for VAT adds it to the fee at the standard rate, which is 20% at the time of writing. Registration becomes compulsory once taxable turnover passes £90,000 in a rolling 12 months, the threshold since April 2024, so a sole consultant may or may not charge it. A VAT-registered client can usually reclaim the VAT on the invoice; a business that is not registered cannot, so its true cost is the fee plus VAT. Always ask whether a quote is “plus VAT”. How VAT applies to the ad spend itself is a separate matter, covered under VAT on digital advertising.
Common mistakes
- Comparing fees without comparing scope: how often the account is worked on, what reporting you get, whether tracking and landing page advice are included.
- Accepting a bundled price where you hand over one sum and do not know how much reached Google.
- Letting the agency own the Google Ads account, so you lose the history if you leave.
- Skipping the contract terms: minimum periods, notice periods and what happens to the account on exit.
- Budgeting without VAT when your business cannot reclaim it.
How to act on it
Ask every provider the same questions. What exactly is included each month? Who owns the account and the payments profile? How does the fee change if spend doubles? Is the price quoted before or after VAT? What is the notice period? Agencies can still access an account you own through a manager account, so ownership never needs to be a trade-off.
Then judge the fee against the total cost per customer, not against other fees in isolation. How I scope and run accounts is set out on my PPC management page.